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Accuray (ARAY) Q3 Earnings Lag Estimates, Gross Margin Contracts
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Accuray Incorporated (ARAY - Free Report) reported a loss per share of 6 cents for the third quarter of fiscal 2024 against the year-ago period’s earnings per share (EPS) of a penny. The metric was also wider than the Zacks Consensus Estimate of a loss of a penny per share.
Revenues in Detail
Accuray registered revenues of $101.1 million in the third quarter of fiscal 2024, down 14.3% year over year. The figure lagged the Zacks Consensus Estimate by 11.8%.
The overall top-line growth was dampened by lower revenues from both Products and Services.
At constant exchange rate (CER), net revenues were $ 102.4 million, representing a 13% decrease from the prior-year period.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal third quarter, Product revenues declined 21.1% from the year-ago quarter to $49.6 million. This primarily resulted due to shipments of eight fewer units year over year.
Services revenues fell 6.7% from the year-ago quarter to $51.5 million. At CER, Services revenues were down 6%. This resulted from $3 million of lower revenue related to installation, training primarily tied to lower new U.S. installations and lower spare parts volume.
Gross product orders totaled $89.1 million, up 20.8% year over year.
Accuray Incorporated Price, Consensus and EPS Surprise
In the quarter under review, Accuray’s gross profit declined 24.9% to $29.1 million. Gross margin contracted 405 basis points to 28.7%.
Selling and marketing expenses fell 7.3% to $10.3 million. Research and development expenses declined 23.2% year over year to $10.9 million, while general and administrative expenses went up 12.2% year over year to $12.4 million. Total operating expenses of $33.6 million decreased 7.6% year over year.
Operating loss totaled $4.6 million in the fiscal third quarter against the prior-year quarter’s operating profit of $2.3 million.
Financial Position
Accuray exited third-quarter fiscal 2024 with cash and cash equivalents of $60.5 million compared with $72.8 million at the end of the fiscal second quarter.
Total debt (including short-term debt) at the end of third-quarter fiscal 2024 was $173.5 million compared with $174.8 million at the fiscal second-quarter end.
Guidance
Accuray has lowered its revenue outlook for fiscal 2024 based on current expectations.
The company expects its fiscal year revenues to be in the range of $432 million-$437 million, lowered from its previous outlook of $460 million-$470 million (reflecting year-over-year growth of 3-5%). The Zacks Consensus Estimate is pegged at $463.5 million.
Our Take
Accuray ended the third quarter of fiscal 2024 with a wider-than-expected loss per share and lower-than-expected revenues. Its dismal top-line and bottom-line performances were disappointing. A decline in the company’s segmental revenues was discouraging. The fall in revenues from the Americas and Japan was also worrying. The gross margin contraction also does not bode well.
On the earnings call, management commented that it has been witnessing broader weakness in capital equipment budgets in 2024. Management believes these reduced budgets and lower capital deployment priority for radiotherapy equipment have contributed to slow demand in the near term. This raises our apprehension about Accuray’s prospects of order shipments.
On a positive note, Accuray’s performance was strong in the EIMEA (Europe, India, the Middle East and Africa) region, with growth driven by fast-growing emerging markets, and the APAC region. The expansion in the global installed base also looks promising. An uptick in gross orders was also promising.
On the earnings call, management confirmed that it is continuing with early market launch efforts for Helix (Accuray’s non-China access product) first in India. The company is currently awaiting regulatory approval for the full market launch, which is expected by the calendar year-end 2024. Also, the company has received regulatory approval to market the Tomo C equipment in China. These raise our optimism about the stock.
Zacks Rank and Key Picks
Accuray currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , ResMed Inc. (RMD - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
ResMed reported third-quarter fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 10.7%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.
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Accuray (ARAY) Q3 Earnings Lag Estimates, Gross Margin Contracts
Accuray Incorporated (ARAY - Free Report) reported a loss per share of 6 cents for the third quarter of fiscal 2024 against the year-ago period’s earnings per share (EPS) of a penny. The metric was also wider than the Zacks Consensus Estimate of a loss of a penny per share.
Revenues in Detail
Accuray registered revenues of $101.1 million in the third quarter of fiscal 2024, down 14.3% year over year. The figure lagged the Zacks Consensus Estimate by 11.8%.
The overall top-line growth was dampened by lower revenues from both Products and Services.
At constant exchange rate (CER), net revenues were $ 102.4 million, representing a 13% decrease from the prior-year period.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal third quarter, Product revenues declined 21.1% from the year-ago quarter to $49.6 million. This primarily resulted due to shipments of eight fewer units year over year.
Services revenues fell 6.7% from the year-ago quarter to $51.5 million. At CER, Services revenues were down 6%. This resulted from $3 million of lower revenue related to installation, training primarily tied to lower new U.S. installations and lower spare parts volume.
Gross product orders totaled $89.1 million, up 20.8% year over year.
Accuray Incorporated Price, Consensus and EPS Surprise
Accuray Incorporated price-consensus-eps-surprise-chart | Accuray Incorporated Quote
Margin Trend
In the quarter under review, Accuray’s gross profit declined 24.9% to $29.1 million. Gross margin contracted 405 basis points to 28.7%.
Selling and marketing expenses fell 7.3% to $10.3 million. Research and development expenses declined 23.2% year over year to $10.9 million, while general and administrative expenses went up 12.2% year over year to $12.4 million. Total operating expenses of $33.6 million decreased 7.6% year over year.
Operating loss totaled $4.6 million in the fiscal third quarter against the prior-year quarter’s operating profit of $2.3 million.
Financial Position
Accuray exited third-quarter fiscal 2024 with cash and cash equivalents of $60.5 million compared with $72.8 million at the end of the fiscal second quarter.
Total debt (including short-term debt) at the end of third-quarter fiscal 2024 was $173.5 million compared with $174.8 million at the fiscal second-quarter end.
Guidance
Accuray has lowered its revenue outlook for fiscal 2024 based on current expectations.
The company expects its fiscal year revenues to be in the range of $432 million-$437 million, lowered from its previous outlook of $460 million-$470 million (reflecting year-over-year growth of 3-5%). The Zacks Consensus Estimate is pegged at $463.5 million.
Our Take
Accuray ended the third quarter of fiscal 2024 with a wider-than-expected loss per share and lower-than-expected revenues. Its dismal top-line and bottom-line performances were disappointing. A decline in the company’s segmental revenues was discouraging. The fall in revenues from the Americas and Japan was also worrying. The gross margin contraction also does not bode well.
On the earnings call, management commented that it has been witnessing broader weakness in capital equipment budgets in 2024. Management believes these reduced budgets and lower capital deployment priority for radiotherapy equipment have contributed to slow demand in the near term. This raises our apprehension about Accuray’s prospects of order shipments.
On a positive note, Accuray’s performance was strong in the EIMEA (Europe, India, the Middle East and Africa) region, with growth driven by fast-growing emerging markets, and the APAC region. The expansion in the global installed base also looks promising. An uptick in gross orders was also promising.
On the earnings call, management confirmed that it is continuing with early market launch efforts for Helix (Accuray’s non-China access product) first in India. The company is currently awaiting regulatory approval for the full market launch, which is expected by the calendar year-end 2024. Also, the company has received regulatory approval to market the Tomo C equipment in China. These raise our optimism about the stock.
Zacks Rank and Key Picks
Accuray currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , ResMed Inc. (RMD - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
ResMed reported third-quarter fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 10.7%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.